President Vladimir Putin has signed a law creating a legal basis for taxing cryptocurrency mining and transactions, one of Russia’s first moves to regulate the cryptocurrency industry.
The new law, in amendments to the Russian Tax Code, recognizes digital currencies as property.
Under the law, cryptocurrency mining and sales are exempt from value-added tax (VAT), but mining operators must report to local authorities or face a fine of 40,000 rubles (about $380) if they fail to report.
Cryptocurrency trading, on the other hand, will be subject to income tax: 13% for income up to 2.4 million rubles (about $22,300) and 15% for amounts above that.
Corporate entities will be subject to the standard 25% corporate tax rate starting next year.
Most of the law’s provisions are expected to come into effect immediately, while some exemptions could be delayed.
Russia, one of the world’s leaders in cryptocurrency mining, plans to earn 200 billion rubles (about $2 billion) a year from miners.
On November 1, the Russian Tax Service launched a database of state-approved large-scale miners under a law signed by Putin in August.
Another law passed at the same time allows the Russian Central Bank to conduct a pilot project for cross-border cryptocurrency transactions.
Russia hopes that digital cryptocurrency transactions, which are harder to track by Western regulators, will make it easier to buy banned goods on the international market.
The United States has threatened banks in countries such as China, Turkey and the United Arab Emirates with sanctions if they help Russia acquire banned military goods or trade with sanctioned Russian companies.
